Archive

July 26, 2024
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HEW: Consolidating Risk-off

  • An unwind of equity longs and FX carry trades looks like a generalised reduction of risk assigned to consensus positions without significant macro news. Trading Trump seems like an uncompelling cause, and the US services PMI was rudely strong again.
  • Market repricing should also respond to policy next week. A BOJ hike would help keep the desired Yen strength while the Fed softly signalling September would offer reassurance. A BoE rate cut would likely clear out more crowded sterling long positions.

By Philip Rush

July 19, 2024
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HEW: Rate Cuts Not Boxed-In

  • A slew of UK economic data was mostly near expectations, but further services inflation strength settled the balance hawkishly. The ECB preserved flexibility but will likely cut in September, and the BoE would need to reassess old news not to cut in August.
  • The Bank of Canada can respond to rising unemployment and low inflation next week with a likely consecutive rate cut rather than be boxed in by the on-hold Fed. Data highlights include the flash PMIs, US GDP for Q2 and core PCE inflation for June.

By Philip Rush

July 12, 2024
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HEW: Doves Ticking Boxes

  • Voters know what they don’t want, with the French overcompensating in their rejection of Rassemblement National. Central bankers have their lists and will welcome progress towards the rate cuts we still expect in September (Fed and ECB) and August (BoE).
  • Next week’s ECB meeting should confirm that deferred step without committing after reflecting on the final HICP print. The UK’s inflation and labour market data are the most critical data sets left to inform August’s decision after June’s finely balanced one.

By Philip Rush

July 05, 2024
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HEW: Passing Political Parties

  • Voters in the UK and France (first round) gave their rulers a kicking by supporting the opposition towards power in elections over the past week. US voters are also turning away from the aged Biden. BoE, ECB and Fed cuts remain on course for Aug-Sep.
  • Next week is busier with monetary policy decisions from the RBNZ, BOK, BNM and BCRP. French elections (second round) and US inflation data will likely be the highlights for global markets as another benign outcome would encourage a September Fed cut.

By Philip Rush

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